Understand Corporate Tax Rates for AY 2021-22, AY 2022-23, AY 2023-24 & AY 2024-25. Learn about exemptions, conditions, and implications for companies. Stay informed for effective tax planning.
I. Corporate Tax Rate Applicable for AY 2021-2022
Companies with Turnover or gross receipts in 2018-19 up to ₹400 crores, Income Tax Rate: 25%
Companies with Turnover or gross receipts in 2018-2019 exceeding ₹400 crores, Income Tax Rate: 30%
Surcharge : 7% on the amount of income tax if net income exceeds 1 Crore but does not exceed 10 crore and 12% on the amount of income tax if net income exceeds 10 crore.
Health and Education Cess: 4% of Income Tax plus Surcharge
Note: In AY 2021-22, Minimum Alternate Tax (MAT) will be levied at 15% on Book profit.
II. Corporate Tax Rate Applicable for AY 2022-2023
Income Tax for Companies with Turnover or gross receipts in 2019-2020 up to ₹400 crores, Income Tax Rate: 25%
Income Tax for Companies with Turnover or gross receipts in 2019-2020 exceeding ₹400 crores, Income Tax Rate: 30%
Health and Education Cess: 4% of Income Tax plus Surcharge
Note: In AY 2022-23, Minimum Alternate Tax (MAT) will be levied at 15% on Book profit
III. Corporate Tax Rate Applicable for AY 2023-2024
Income Tax for Companies with Turnover or gross receipts in 2020-2021 up to ₹400 crores, Income Tax Rate: 25%
Income Tax for Companies with Turnover or gross receipts in 2020-2021 exceeding ₹400 crores, Income Tax Rate: 30%
Health and Education Cess: 4% of Income Tax plus Surcharge
Note: In AY 2023-24, Minimum Alternate Tax (MAT) will be levied at 15% on Book profit
IV. Corporate Tax Rate Applicable for AY 2024-2025
Income Tax for Companies with Turnover or gross receipts in 2020-2021 up to ₹400 crores, Income Tax Rate: 25%
Income Tax for Companies with Turnover or gross receipts in 2020-2021 exceeding ₹400 crores, Income Tax Rate: 30%
Health and Education Cess: 4% of Income Tax plus Surcharge
Note: In AY 2024-25, Minimum Alternate Tax (MAT) will be levied at 15% on Book profit
V. Tax on Income of certain Domestic Manufacturing Companies (w.e.f 2017-18)—Sec 115BA. (AY 2021-22, AY 2022-2023 & AY 2023-2024, AY 2024-2025).
A domestic company may pay tax at 25% (+ surcharge, if any, and health and education cess), at its option if it fulfills certain conditions.
Note: In AY 2021-22 and AY 2022-23, AY 2023-2024, and AY 2024-2025, Minimum Alternate Tax (MAT) will be levied at 15% on Book profit
VI. For All Existing Domestic Companies (irrespective of its date of incorporation or nature of activity) [As per section 115BAA] Income Tax Act 1961.
Rate: 22% (Subject to Note 1). AY 2021-2022, AY 2022-2023, AY 2023-2024, and AY 2024-2025.
Surcharge : 10 % on the amount of income tax if net income exceeds 1 Crore
Note -I: Following conditions need to be satisfied to get the benefit of the lower tax rate introduced by Section 115BAA:
a. Without claiming exemption/deduction under:
i. 10AA [SEZ units],
ii. u/s 32(1)(iia) [additional depreciation qua new plant and machinery @ 20%/ 30%],
iii. u/s 32AD [15% on new assets in the undertaking set up in specified backward areas in Andhra Pradesh, Bihar, Telangana, and West Bengal],
iv. u/s 33AB [specified percentage of amounts deposited with Tea/Coffee/Rubber Board],
v. u/s 33ABA [specified percentage of amounts deposited in Site Restoration Account],
vi. u/s 35(1)(ii)/(iia),
vii. u/s 35(2AA) [specified deduction for scientific research],
viii. u/s 35AD [expenditure on specified business],
ix. u/s 35CCC [expenditure on an agricultural extension project],
x. u/s 35CCD [expenditure on a skill development project],
xi. under Part C of Chapter VIA except section 80JJAA and sec 80 M of the Act (such as 80IA/IB/IC/ID/IE, etc.).
b. Without the set-off of any brought forward losses to the extent such a loss relates to deductions mentioned above. Such losses would also not be allowed to be carried forward to subsequent years.
c. After claiming depreciation other than additional depreciation u/s 32(1)(iia). The benefit of the lower rate under the aforesaid section can be exercised by the company from any year commencing from AY 2020-21 or onwards. Such an option is to be exercised in the prescribed manner before the due date of return u/s 139(1) for the year in which the option is exercised. The option once exercised would be binding for subsequent years and cannot be withdrawn.
Companies availing the benefit of the lower tax rate under new provisions of sections 115BAA/115BAB have been exempted from MAT on book profit under section 115JB.
VII. For all new manufacturing domestic companies [As per section 115BAB]. AY 2021-2022, AY 2022-2023, AY 2023-2024, and AY 2024-2025.
Income Tax Rate: 15% (Subject to Note 1).
Surcharge : 10 % on the amount of income tax if net income exceeds 1 Crore
Health and Education Cess: 4% of Income Tax plus Surcharge
Note: 1. Following conditions need to be satisfied to get the benefit of the lower tax rate introduced by Section 115BAB:
a) If such a company is set up and registered on or after 1st October 2019 and commences manufacturing activity up to 31st March 2024.
b) Akin to the provisions of section 115BAA, income for the purposes of the aforesaid preferential rate has to be computed without claiming exemptions/deductions, set-off of brought forward losses, as prescribed in that section and discussed above.
c) Additionally, the following conditions must be fulfilled by the company to avail the benefit of the lower tax rate: the company must not be formed by splitting up or the reconstruction of a business already in existence; the company must not use machinery or plant previously used for any purpose. Used plant and machinery to the extent of 20% of the total value of plant and machinery are permissible; the company must not use a building previously used as a hotel or a convention Centre.
d) Akin to the provisions of section 115BAA, if the company opts for a lower rate of tax given under this section, it shall not be able to subsequently withdraw the option.
Companies availing the benefit of the lower tax rate under new provisions of sections 115BAA/115BAB have been exempted from MAT on book profit under section 115JB.
VIII. Meaning and Calculation of Book profit (Section 115JB). AY 2021-21, AY 2022-2023, AY 2023-2024, and AY 2024-2025.
As per Explanation 1 to Section 115JB(2), “book profit” for the purposes of Section 115JB means net profit as shown in the statement of profit and loss prepared in accordance with Schedule III to the Companies Act, 2013–
A) as increased by:
1. Income-tax paid or payable and the provisions Income-tax including education cess, interest, dividend distribution tax (DDT) under the Income-tax Act, 1961
2. Amounts carried to any reserves, by whatever name called
3. Amount or amounts set aside to provisions made for meeting liabilities, other than ascertained liabilities
4. Amount by way of provision for losses of subsidiary companies
5. Amount or amounts of dividends paid or proposed
6. Amount or amounts of expenditure relatable to any income to which section 10 (other than the provisions contained in clause (38) thereof) or section 11 or section 12 apply
7. Amount of Depreciation debited to Profit & Loss A/C
8. Amount of deferred tax and the provisions thereof and the amount or amounts set aside as a provision for the diminution in the value of any asset.
9. Amount standing in the revaluation reserve relating to the revalued asset on the retirement or disposal of such an asset
10. Amount of income/loss in the case of units referred to in Section 47(xvii)
B) As reduced by:
1. Amount withdrawn from reserves or provisions if any such amount is credited to the profit and loss account.
2. Income exempt from tax: The following income, if credited to the profit and loss account, shall be deducted:
a. Income exempt under other clauses of Section 10 (except Sec 10(38))
b. Income exempt under Sections 11 and 12;
3. Share of profit from an AOP on which no income-tax is payable in accordance with the provisions of Section 86 (applicable from the assessment year 2016-17);
4. (in the case of a foreign company) interest, royalty, or technical fees chargeable to tax under Sections 115A to 115BBE, or capital gain arising on transactions in securities if income-tax payable in respect of these incomes under normal provisions (other than provisions governing MAT) is less than the rate of MAT (applicable from the assessment year 2016-17); and
5.Royalty in respect of a patent chargeable to tax under Section 115BBF.
6. Depreciation (other than because of the revaluation of assets) debited to the profit and loss account (applicable from the assessment year 2007-08 onwards)
7. Amount withdrawn from the revaluation reserve credited to the profit and loss account to the extent it does not exceed the amount of depreciation on account of the revaluation of assets [applicable from the assessment year 2007-08].
8. The aggregate amount of unabsorbed depreciation and loss brought forward in the case of a company against whom an application for the corporate insolvency resolution process has been admitted by the Adjudicating Authority under Section 7/9/10 of the Insolvency and Bankruptcy Code (applicable from the assessment year 2018-19)
9. Amount of loss (before depreciation) brought forward or unabsorbed depreciation, whichever is less, as per books of account [not being a company that is covered by Item 12A (supra)]
10. The amount of deferred tax, if any such amount is credited to the profit and loss account.
(Republished with amendments)
Author Bio
A trading company constituted in 2018 with foreign partner: 52% and Domestic partner: 48% in Maharashtra
What would be the CIT, surcharge and Cess for the company that makes more than 1CR book profit and turnover less than 400CR in a FY.